A policy aiming to save Medicare money has not had the intended effect on outpatient surgery. 

As the policy expands across the country, researching the results of this policy could inform how adjustments are made moving forward.

The Medicare policy change added something that’s common in private insurance and Medicare Advantage, but rare in traditional fee-for-service Medicare: requiring doctors to get prior authorization from Medicare officials before scheduling certain outpatient procedures. 

Aimed at saving money, the policy sought to make sure certain procedures done at hospitals were medically necessary and not just cosmetic, such as blepharoplasties (eye lid surgery), abdominoplasties (“tummy tucks”), botulinum toxin injections (Botox injections), rhinoplasties (procedures to change the shape of the nose) and vein ablations (removal of visible veins).

The policy, CMS-1717-FC from the federal government, requires that patients with Medicare receive prior authorization to undergo these surgical procedures at hospital outpatient surgery departments. 

At the time the policy went into effect in 2020 it did not apply to ambulatory surgery-based care where patients may also undergo these same-day surgery procedures. 

A new policy is now extending the prior authorization requirement to ambulatory surgery centers starting in certain states.

But at the time of the study, patients covered by traditional Medicare could have the same procedures without prior authorization at ambulatory surgery centers, which are often less costly for same day surgery than hospital outpatient departments. 

However, such centers are still bound by Medicare policy that does not allow these procedures to be covered if they are not medically necessary; billing Medicare for a purely cosmetic procedure is considered fraud. 

Leading a research team at University of Michigan Medical School, Joseph N. Fahmy, M.D., M.S, a research fellow at University of Michigan Health working with Kevin Chung, M.D., a professor of plastic surgery, aimed to evaluate if this policy was effective at reducing hospital outpatient department based surgical volume.

The results showed that there were no significant changes in hospital outpatient department surgical volume after the policy went into effect. 

There had already been a shift away from such centers before the policy, but it did not accelerate after the policy.

Despite the intention to decrease surgical volume and shift surgical care from more expensive hospital outpatient departments to ambulatory surgical centers, the authors conclude that the policy was ineffective in speeding up the process of achieving this goal. 

Fahmy notes that prior authorization in general causes a disruption in administrative workload as well as in the timeliness of care.

“Our findings suggest that the administrative workload increased without the intended impact of reducing the volume of patients having these surgeries at hospital outpatient departments,” said Fahmy.

“For patients, this means that the policy will result in their team having to do extra paperwork which has the potential to delay their care. This makes it important for administrative teams to be aware of the increase in workload as well as patients to be aware that there is potential for a delay in receiving care.”

Fahmy and his team see this as a sign that changes need to be made to shift the flow of surgical patients without putting a strain on administrative teams that may already be feeling pressure.

“Colleagues in our field should advocate for other policy levers to constrain spending, such as narrowing payment disparities between different facilities performing the same surgery,” said Fahmy.

“The data suggest that alternative policy levers to prior authorization are better suited to accomplish goals of reducing spending on surgical care nationally without increasing administrative workload. These policy approaches may include narrowing payment gaps between hospital outpatient departments and ambulatory surgery centers for similar care.”

Additional authors: Trista M. Benítez, M.P.H. from the Section of Plastic Surgery, Department of Surgery, University of Michigan Medical School, Ann Arbor, MI; and Zhongzhe Ouyang, M.S. and  Lu Wang, Ph.D. from the Department of Biostatistics, University of Michigan School of Public Health, Ann Arbor, MI.

Funding/disclosures: Plastic Surgery Foundation Pilot Grant, National Institutes of Health T32 training grant (5T32GM008616-23), American Foundation for Surgery of the Hand.

Tech transfer(s)/Conflict(s) of interest: Joseph Fahmy has potential conflicts including support from grants from the national institutes of health, Plastic Surgery Foundation, and American Foundation for Surgery of the Hand 

Paper cited: “2020 CMS prior authorization for hospital outpatient departments: Associated surgical volume impact,” Surgery. DOI: 10.1016/j.surg.2024.07.010 

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